The wrangling wasn’t just limited to family matters. Darrell Lea was also embroiled in a two-year court case with Cadbury over Darrell Lea’s use of the colour purple.
Cadbury claimed Darrell Lea misled customers into thinking its products were associated with Cadbury when it used purple in its stores and for products such as Rocklea Road chocolate and Bo-Peep lollies.
The Federal Court dismissed Cadbury’s application after Darrell Lea said Cadbury’s knowledge was limited to inspection of goods on display and physical surroundings, and did not involve any observation of consumer behaviour.
Michael Lea called the decision a victory for commonsense.
“We have used various shades of purple in our packaging and shop displays for decades,” he said in a statement after the case.
He said Darrell Lea fitted its shops out using purple as the dominant colour 10 years before Cadbury raised any complaints.
However, in the end, it was not family politics or legal disputes that appear to have led to the company’s demise but its failure to move with industry trends.
Here’s five lessons from Darrell Lea’s demise:
1. Beware of the middle ground
IBISWorld senior analyst Naren Sivasailam told SmartCompany that Australians were still buying and eating lollies and chocolate but Darrell Lea missed out on their purchases as a middle-of-the-road retailer.
“People are certainly eating chocolate and buying it but they have either diverged to premium chocolatiers like Koko Black and Haigh’s or are going to supermarkets for chocolate bars,” Sivasailam says.
“Darrell Lea occupied that unfortunate middle ground despite its longevity and iconic status.”
Sivasailam says Darrell Lea missed out by not being high end but also by not being a cheap supermarket chocolate.
“It’s perhaps the fact that they weren’t available at supermarkets that might have damaged some perception. That could certainly be one reason particularly, as consumers gravitated towards supermarkets in the years since the financial crisis,” he says.
“70% of everything we buy comes from supermarket and if you don’t place yourself there you have to convince the consumer to go out of their way to get your product.”
2. Don’t lose the magic
Darrell Lea’s slogan is “creating sweet magic”, but according to Brian Walker, retail consultant at the Retail Doctor Group, “they talk about creating magic but I can’t see any magic there.”
Walker says Darrell Lea lost its point of difference by being available in locations like Caltex service stations.
“They probably took it all a bit downmarket. You can walk into pharmacies and see stands for Darrell Lea,” he says.
“They are not an aspirational, emotional purchase which chocolate invariably can be. Darrell Lea would not rank in the consumers mindset as a best chocolatier.”
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
